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Income Tax Appellate Tribunal, “C” BENCH KOLKATA
Before: SHRI SONJOY SARMA & SHRI GIRISH AGRAWAL
Present for: Appellant by : Shri Ketan Ved, CA and Shri Alpesh Gupta, CA Respondent by : Shri Kallol Mistry, JCIT, Sr. DR Date of Hearing : 06.09.2023 Date of Pronouncement : 08.09.2023 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of Ld. DCIT, Circle-11(1), Kolkata dated 22.04.2022 passed u/s. 143(3) read with section 144C r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2017-18.
2. Assessee has taken as many as eight grounds of appeal including sub-grounds in each of them. However, Ld. Counsel for the assessee emphasized on ground no.1 to be dealt first and if found in its favour, other grounds need not to be adjudicated upon. Vide ground no. 1, assessee has challenged the validity of the impugned assessment order since it has been passed manually without mentioning document identification no. (DIN) in its body. The said ground is reproduced as under:
1. Order passed u/s. 143(3) r.w.s. 144C of the act dated 22 April 2022 (issued to the assessee on 8 February 2023) is void ab initio and is liable to be quashed as passed manually without mentioning DIN in its body and the same was passed in complete violation of the Circular bearing no. 19/2019 dated 14 August 2019. 1.1. That on the facts and in the circumstances of the case and in law, assessment order passed under section 143(3) r.w.s. 144C of the Act dated 22 April 2022 (communication for DIN issued to the assessee on 8 February 2023) is void ab initio and is liable to be quashed. 1.2. that on the facts and in the circumstances of the case and in law, the Ld. AO erred in passing assessment order under section 143(3) r.w.s. 144C of the Act dated 22 April 2022 (communication for DIN issued to the assessee on 8 February 2023) manually without mentioning DIN in its body and the same was passed in complete violation of the Circular bearing no. 19/2019 dated 14 August 2019.”
3. We also note that registry has observed about inordinate delay in filing the present appeal before the Tribunal, without mentioning specific number of days of delay. From the petition for condonation of delay placed on record, we note that assessee has claimed that the impugned order was neither received by the assessee on its registered e-mail ID nor by post. Further, it was also not uploaded in the Income tax E-Portal until 15.03.2023. However, in the Income Tax Portal the date of upload of DIN letter is mentioned as 08.02.2023, which demonstrates that DIN was generated subsequently, though the assessment order was passed manually on 22.04.2022. Assessee thus, submitted that the order was received by it on 16.03.2023 and thereafter, the appeal was submitted before the Tribunal. Since the reason for delay is intricately related to ground no.1 raised by the assessee, we will deal with it while adjudicating upon ground no.1.
Brief facts as culled out from records are that assessee is engaged in the manufacturing of industrial gasses and engineering goods. It filed its return of income on 30.11.2017, reporting a loss of Rs.123,41,80,381/-. This return was subsequently revised on 25.03.2019 with a loss of Rs.122,67,39,659/-.
4.1. Ld. Counsel for the assessee at the outset referred to the first page of the impugned assessment order passed u/s. 143(3) read with section 144C and 144B of the Act dated 22.04.2022 to demonstrate that it is an order passed manually by the Ld. AO. From the first page of the body of the order placed at page 11 of the paper book, he pointed out that there is no mention of DIN thereon. He then took the Bench through all the pages of the said assessment order and submitted that even on the last page no reference is mentioned about the DIN generation and its documentation.
4.1. Ld. Counsel also referred to the computation sheet generated along with the assessment order which is also manually prepared document and does not contain DIN in its body. The same is placed at pages 22 to 25 of the paper book. He specifically pointed out to the column titled as “DIN & Documents No.” which is left blank in the computation sheet. Scanned copy of the same is reproduced for ease of reference:
Further, Ld. Counsel referred to the notice of demand issued u/s. 156 of the Act by the Ld. AO which is also dated 22.04.2022. In this notice also, Ld. Counsel demonstrated that the box titled with “DIN and Notice No.” is left blank without mentioning the required numbers. Copy of the same is reproduced for ease of reference.
It was then submitted that an intimation letter for order passed u/s. 143(3) was issued dated 18.01.2023 mentioning that the impugned order dated 22.04.2022 is having stated DIN. Copy of this intimation letter is reproduced for ease of reference:
In this reference, Ld. Counsel pointed the notice/communication reference ID to submit that this intimation letter was issued on 08.02.2023. The said is reproduced as under:
He thus, strongly submitted that in view of aforesaid facts and circumstances, the impugned assessment order dated 22.04.2022 is in gross violation of the requirements contained in CBDT Circular No. 19/2019 dated 14.08.2019 and, therefore, is void ab initio and liable to be quashed.
8.1. He placed reliance on the decision of Coordinate Bench of ITAT, Kolkata in the case of Tata Medical Centre Trust Vs. CIT (2022) 140 taxmann.com 431 (Kol) wherein it was held that revision order passed u/s. 263 issued manually without DIN in its body was invalid and deemed to have never been issued (undersigned AM is the author of this order).
8.2. He placed reliance on the recent decision of Hon’ble High Court of Bombay in the case of Ashok Commercial Enterprises Vs. ACIT in Writ Petition No. 2595 of 2021 and Others, dated 04.09.2023. The issue of passing an assessment order without DIN in compliance with the requirement of CBDT Circular No. 19 of 2019 has been held to be invalid by the Hon’ble High court. The findings and conclusions arrived at by the Hon’ble High court on this issue in para 18 is extensively dealt with on the provisions contained in the said CBDT Circular. Hon’ble High Court has also considered and took support from the decision of CIT Vs. Brandix Mauritius Holdings Ltd. (2023) 149 taxmann.com 238 (Del.) by Hon’ble Delhi High Court wherein it was held that an order passed in contravention of the said CBDT Circular is void, bad in law and of no legal effect. The Hon’ble High Court of Bombay in its conclusion held that the assessment order is ought to be treated as invalid and deemed to have never been issued.
8.3. Para 18 of the said order of the Hon’ble High Court is extracted below for ready reference: “18 Whether the impugned assessment order dated 28th September 2021 is invalid on account of it being issued without a DIN? (a) The CBDT, in exercise of powers under Section 119(1) of the Act, has issued a Circular No.19/2019 dated 14th August 2019 providing that no communication shall be issued by any Income Tax Authority inter alia relating to assessment orders, statutory or otherwise, inquiries, approvals, etc. to an assessee or any other person on or after 1st October 2019 unless a computer generated DIN has been allotted and is quoted in the body of such communication. The Circular reads as under: CIRCULAR NO.19/2019 (E NO.225/95/2019-ITA.II], DATED 14-8-2019 With the launch of various e-governance Initiatives, Income tax Department is moving toward total computerization of its work. This has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax-administration Presently; almost all notices and orders are being generated electronically on the Income Tax Business Application (ITBA) platform. However; it has been brought to the notice of the Central Board of Direct Taxes (the Board) that there have been some instances in which the notice. order; summons, letter and any correspondence (hereinafter referred to as "communication" were found to have been issued manually, without maintaining a proper audit trail of such communication.
In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the income-tax Act, 1961 (hereinafter referred to as "the Act'), has decided that no communication shall be issued by any income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry. investigation verification of information penalty; prosecution, rectification approval etc. to the assessee or any other person, on or after the 1st day of October; 2019 unless a computer- generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication.
In exceptional circumstances such as,- (i) when there are technical difficulties in generating/allotting/quoting the DIN and issuance of communication electronically; or (ii) when communication regarding enquiry; verification etc. is required to be issued by an income-tax authority; who is outside the office, for discharging his official duties: or (iii) when due to delay in PAN migration. PAN is lying with non-jurisdictional Assessing Officer; or (iv) when PAN of assessee is not available and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or (v) when the functionality to issue communication is not available in the system, the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner/Director General of income-tax. In cases where manual communication is required to be issued due to delay in PAN migration, the proposal seeking approval for issuance of manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner/ Director General of Income-tax for issue of manual communication in the following format- "....... This communication issues manually without a DIN on account of reason/reasons given in para3(i)/3(ii)/3(iii)/3(iv)/3(v) of the CBDT Circular No .... dated (strike off those which are not applicable) and with the approval of the Chief Commissioner/Director General of Income Tax vide number .... dated ....
4. Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued.
5. The communication issued manually in the three situations specified in para 3- (i), (ii) or (iii) above shall have to be regularised within 15 working days of its issuance, by- i. uploading the manual communication on the System. ii. compulsorily generating the DIN on the System; iii. communicating the DIN so generated to the assessee/any other person as per electronically generated pro-forma available on the System. 6. An intimation of issuance of manual communication for the reasons mentioned in para 3(v) shall be sent to the Principal Director General of Income-tax (Systems) within seven days from the date of its issuance. 7. Further, in all pending assessment proceedings, where notices were issued manually; prior to issuance of this Circular, the Income-tax authorities shall identify such cases and shall upload the notices in these cases on the Systems by 31th October, 2019. Paragraph 3 of the Circular sets out five exceptional circumstances where the aforementioned mandatory requirement may not be adhered to, but requires that if an order/communication is to be issued without a DIN, it can be done only after recording reasons in writing in the file and with the prior written approval of the Chief Commissioner/Director General of Income Tax. Further, paragraph 3 requires that if such exceptional circumstances are claimed, the orders/communication issued without a DIN must state this fact in a specific format set out in paragraph 3 of the Circular. Paragraph 4 of the Circular provides that any order/communication which is not in conformity with paragraphs 2 and 3 of the Circular shall be treated as invalid and shall be deemed to have never been issued. The contents of the Circular have been reiterated in a Press Release dated 14th August, 2019; (b) It is indisputable that the impugned assessment order dated 28th September 2021 does not bear a DIN and further that the said order issued without a DIN does not bear the required format set out in paragraph 3 of the Circular and, therefore, the impugned assessment orders for Assessment Year 2011-2012 to 2019-2020 ought to be treated as invalid and deemed never to have been issued. We find support for this view in Brandix Mauritius Holdings Ltd. (Supra) where the Hon'ble Delhi High Court has held that an order passed in contravention of the said Circular is void, bad in law and of no legal effect. Paragraphs 16 to 17.1, 18 and 19 read as under : 16. The final assessment order was passed by the Assessing Officer (AO) on 15.10.2019, under Section 147/144(C) (13/143(3) of the Act. Concededly- the final assessment order does not bear a DIN. There is nothing on record to show that the appellant/revenue took steps to demonstrate before the Tribunal that there were exceptional circumstances, as referred to in paragraph 3 of the 2019 Circular; which would sustain the communication of the final assessment order manually- albeit, without DIN. 16.1. Given this situation dearly paragraph 4 of the 2019 Circular would apply.
Paragraph 4 of the 2019 Circular; as extracted hereinabove, decidedly provides that any communication which is not in conformity with paragraph 2 and 3 shall be treated as invalid and shall be deemed to have never been issued. The phraseology of paragraph 4 of the 2019 Circular fairly puts such communication, which includes communication of assessment order; in the category of communication which are non-est in law. 17.1. It is also well established that circulars issued by the CBDT in exercise of its powers under Section 119 of the Act are binding on the revenue. xxxxxxxxxxx 18. The argument advanced on behalf the appellant/revenue, that recourse can be taken to Section 292B of the Act, is untenable, having regard to the phraseology used in paragraph 4 of the 2019 Circular.
The object and purpose of the issuance of the 2019 Circular, as indicated hereinabove, inter alia, was to create an audit trail. Therefore, the communication relating to assessments, appeals, orders, etcetera which find mention in paragraph 2 of the 2019 Circular, albeit without DIN, can have no standing in law, having regard to the provisions of paragraph 4 of the 2019 Circular. (c) During the course of hearing, Mr. Suresh Kumar produced an intimation letter dated 13th October 2021 stating that the order dated 28th September 2021 under Section 153C of the Act has a DIN, which is set out therein. Even if this is held to be in compliance with paragraph 5 of the Circular, which deals with regularization of communications without DIN, this can only seek to regularize the failure to generate a DIN, but yet the requirements of paragraph 3 of the Circular will still remain contravened and consequently, the order dated 28th September 2021 ought to be treated as invalid and never issued; (d) The said Circular also applies to the satisfaction note dated 13th July 2021 issued by respondent no.l. The satisfaction note will fall within the scope of paragraph 2 of the Circular as a communication of the specified type issued to any person. In the case of the satisfaction note no regularization dated 13th October 2021 has been issued; (e) In view of the binding nature of Circular issued under Section 119 of the Act, and the peculiar facts and circumstances of the case, the consequences of contravention of the Circular set out above, therefore, ought to be given full effect to. The object of the said Circular is clear and laudatory and intended to ensure that proper trail of all assessment and other orders are maintained and further that any deviation therefrom can only be undertaken after prior written approval of the higher authorities under the Act. Therefore, the satisfaction note dated 13th July 2021 and the impugned order of assessment dated zs- September 2021 ought to be treated as invalid and deemed never to have been issued; (f) On this ground, rule ought to be made absolute in the following petitions : A.Y. 2011-2012 - WP No.2593 of 2021 A.Y. 2012-2013 - WP No.2598 of 2021 A.Y. 2013-2014 - WP No.2847 of 2021 A.Y. 2014-2015 - WP No.2597 of 2021 A.Y. 2015-2016 - WP NO.2594 of 2021 A.Y. 2016-2017 - WP No.2588 of 2021 A.Y. 2017-2018 - WP No.2595 of 2021 A.Y. 2018-2019 - WP No.2625 of 2021 A.Y. 2019-2020 - WP No.2696 of 2021”
Per contra, Ld. Sr. DR placed reliance on the orders of the authorities below.
We have heard the rival contentions and perused the material available on record. Ld. Counsel has evidently demonstrated before us that impugned assessment order and its computation sheet have been passed manually and all the three documents namely, the assessment order, computation sheet and notice of demand u/s. 156, do not contain DIN in their body, as the relevant box is left blank. 10.1. Further, an intimation has been sent about DIN in respect of the impugned assessment order which is much later, after the date of assessment order. Fact in this respect is that assessment order is dated 22.04.2022 and the intimation letter about the DIN is dated 18.01.2023 which has been issued on 08.02.2023.
10.2 In view of the above discussions and the facts on record, we respectfully following the decision of Hon’ble High Court of Bombay(supra) as well as Hon’ble High Court of Delhi (supra) as also the decision of Coordinate Bench of ITAT, Kolkata in the case of Tata Medical Centre Trust (supra), we hold that the impugned assessment order is invalid and is deemed to have never been issued as per para 4 of the CBDT Circular since it is not in conformity with the same.
10.3. In respect of observation of registry about the inordinate delay in filing of the present appeal before the Tribunal, the reasons stated by the assessee are directly linked to the issue relating to DIN and its intimation to the assessee by which the assessment order was made available to it, only on 16.03.2023. Considering this fact, we condone the delay as observed by the registry. Accordingly, ground no. 1 taken by the assessee is allowed.
Since the impugned assessment order has been held to be invalid and deemed to have never been issued, all other grounds taken by the assessee are rendered academic in nature and, therefore, not adjudicated upon.